The Cabinet Committee on Economic Affairs has approved the continuation of the Mill Gate Price Scheme (MGPS) along with 10 percent subsidy component with modifications.   The scheme is now renamed as the Yarn Supply Scheme (YSS).

The plan outlay for YSS during the 12th Plan will be Rs.443 crore.

The scheme will cover the weavers who are under privileged as also vulnerable groups, by providing them subsidized yarn so that they can compete with the powerloom and mill sector. The target for the 12th Plan will be to supply 3506 lakh kg yarn worth Rs.4364 crore.

The target of providing service to beneficiaries under YSS has been accordingly fixed to serve all 23 lakh handloom units.

The following modifications have been carried out in the existing scheme in the 12th Plan:

1. At present, 10 percent subsidy on mill gate price is payable to cotton yarn and domestic silk with quantity restrictions. Under the new scheme restriction for cotton yarn will be as follows:

(i) up to and including 40s - 30 kg per loom/month

(ii) above 40s - 10 kg per loom/month.

For domestic silk, quantity restriction will continue to be four kg per loom/month.

2.   Along with hank yarn and domestic silk, 10 percent subsidy will also be applicable to wool for individual weavers and weavers cooperative societies only, with the following quantity limitation/maximum limit:

3.  To increase the coverage of primary weavers societies and individual weavers and also to introduce cash sale of yarn especially to small weavers instead of payment of advance to precede indenting and supply of yarn with a gap of about 15 to 45 days, National Handloom Development Corporation (NHDC) now proposes to open distribution centres/warehouses in various parts of the country. To begin with 10 such distribution centres are to be set up.

4.  Service charges to NHDC are proposed to be enhanced by 0.5 percent in all the States.

Background:

The Government of India has been implementing MGPS since 1992 for making yarn available to handloom weavers at mill gate price by reimbursing transportation charges to depot operating agencies, which are primary weavers cooperative societies, apex societies and other handloom organisations.

Yarn subsidy policy extended with redesigned quantity limits and broader coverage enabling subsidised yarn access and distribution reforms. The Mill Gate Price Scheme is continued as the Yarn Supply Scheme (YSS) with a 10 percent subsidy on specified yarns to support underprivileged and vulnerable handloom weavers and societies. Modifications set revised quantity limits for cotton yarn and continue limits for domestic silk; extend the subsidy to wool for individual weavers and weaver cooperatives with tiered quantity caps by yarn count; authorize NHDC to open distribution centres and enable cash sales to reduce supply gaps; and increase NHDC service charges uniformly across States.